As expected, the largest impacts are observed under the free
trade scenario, where trade expands markedly and global consumers on average
benefit from a near 11 percent fall in import prices. The increase in trade
would be filled mostly by traditional rice exporting countries, but their export
prices would rise only marginally. The fall in import prices boosts consumer
surplus, more than compensating for the decline in tariff revenue and leading to
an accumulated global welfare gain of US$842 million. On the other hand, 20 out
of the 40 countries/regions included in the analysis lose in terms of welfare
under free trade, mainly reflecting losses in consumer surplus arising from
higher prices. Examples of countries facing large losses include India and
China, even if they face marginal price increases, as the price effects are
magnified by the large consumption in those countries. Consumers in those
countries in which initial protection was the highest, e.g. Japan, Taiwan
Province of China, the EU(25) and Nigeria are the major beneficiaries of trade
liberalization and are responsible for fuelling much of the trade
expansion.

Moving along the reform spectrum, the pure Harbinson scenario
yields smaller gains. Consumer prices fall more moderately and exporting nations
have only marginal benefits to reap. In all scenarios, producers are little
affected by reform. Despite minor changes in output, which are mostly negative,
producer prices rise slightly, leading to very small gains in producer
surpluses.

The impact of SSP/SPP on global trade liberalisation is
noteworthy. If the set of countries in Table 8 were indeed to designate rice for
differentiated treatment, it is evident that the benefits of trade reform would
be severely undermined. Under the free trade or Harbinson scenarios, changes in
the global market are insignificant even if these countries were to make
concessions to improve market access on SSP/SPP. At the extreme, if such
countries were permitted to exclude rice from any trade reform, i.e. no
concessions, simulations reveal that net global welfare would actually
decline.

TABLE 10Summary of Effects: Free Trade Scenario with no
SSP/SPP or LDC Exemptions